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Poland's 'dirty' Eastern block shows some cracks

By Ondrej Pasek

Horse trading intensifies as the eleventh hour approaches for the EU to decide on its 2030 climate and energy policy. And while Poland has led an Eastern coalition to resist ambitious targets for Europe, Ondrej Pasek writes that some may be only reluctantly following Warsaw.

The Czech Republic, often seen as a troublemaker for its Eurosceptic positions and alliances with Poland on issues like energy policy, is back in the news by arguing, together with others in central and eastern Europe, for lower, non-binding 2030 targets in exchange for more money from the Emission Trading Scheme and the EU funds.

The hardline stance was given its latest boost on Monday by Secretary of State Tomas Prouza, who threatened in the Financial Times to walk away from the talks if the current proposal from the Commission does not change.

But the firm stance by the Czech Republic may well be more of a bluff than a serious threat. The country would not win much by blocking the negotiations altogether. The current government of Social Democrat Bohuslav Sobotka has positioned itself against the conservative Euroscepticism once represented by former president Václav Klaus. Additionally, Andrej Babiš, the billionaire agribusinessman who chairs the country's second largest coalition party, is eager to portray the Czech Republic as a willing part of the European political mainstream, in part to secure new EU funding. For a government seeking political reconciliation with Brussels, breaking a deal is not an option.

Why then would the country oppose a binding, 30% target on energy efficiency? According to the Czech position, the 2030 deal must allow Member States the flexibility to decide on their own energy mixes. The Czech government feels fooled – and to an extent justifiably so – by the EU's current 'non-binding' efficiency target, which was later made partially binding when the country implemented the EU's energy efficiency directive.

The problem, however, is not with the target per se, but with how it is accounted for across different sectors of the economy. With a large portion of emissions in the Czech Republic coming from industry, the lignite plants operated by the country's state-owned power giant CEZ, and the deteriorating district heating systems, the country is interested in financing and reporting energy savings at big installations. Fears are that if an efficiency target is made binding, implementing legislation will not properly reflect these national specificities.

At the same time, the government has done its own assessment of energy efficiency measures (albeit using 2020 targets) that demonstrates just how much the Czech Republic can gain from strong efficiency targets. Though never made public, the findings clearly state that following the path to energy savings set by the energy efficiency directive will bring both jobs and economic growth. The study also points out that these benefits can materialise only when neighbouring countries – Poland especially – address the externalities of dirty energy systems, like the impacts to peoples' health from burning coal.

In addition, whether an efficiency target is binding or not, the Czech Republic has made clear that it will continue with its energy savings programmes financed from emission allowances auctioning revenues and EU structural funding.

The Czech Republic has no illusions about being a climate champion. But if approached cautiously, the country can help broker more constructive negotiations than its counterparts in other CEE countries.

Leadership is still lacking, but with the right incentives, Prime Minister Sobotka might be able to rid the country of its troublemaking label.

Ondrej Pasek is energy campaigner at Bankwatch, a network of NGOs monitoring the activities of international financial institutions. He works at the Center for Transport and Energy, a Czech NGO.